In the face of hardships presented by the COVID-19 pandemic, the roll-out of distinct interventions by government has alleviated the harsh impact of the pandemic on foreign businesses.
The extension of due dates for the filing of tax, reduction in tariffs on imported inputs, low interest loans and reduction in utility bills, according to most businesses, have played a significant role in dealing with adverse impacts of the pandemic on their activity.
Foreign Investors operating in the country are estimated to have experienced an average revenue loss of US$75,000 in the second quarter of the year due to the COVID-19 pandemic, according to the Ghana Investment Promotion Centre’s recent ‘Survey on the Impact of Coronavirus (COVID-19) on Foreign Investors in Ghana’ conducted between April 1 – June 12, 2020.
Per findings of the survey, a majority of businesses which represented 51.43 percent of the respondents have been severely impacted by the pandemic. In terms of revenue, 51.4 percent of the respondents sampled by the Centre had experienced losses in excess of US$100,000dollars while the rest pegged their losses between US$100,000 and less than US$1,000.
The pandemic’s impact, according to the survey, was unravelled with the strict lockdown measures imposed worldwide – which caused a severe disruption to demand and supply value chains. This saw most companies experience payment and repayment delays, financial constraints and a reduction in demand for products and services, which translated into revenue losses.
With regard to employment, 40 percent of foreign investors foresee a permanent reduction in their workforce over the coming months. Meanwhile, most workers have had to stay home temporarily due to the pandemic.
Despite the downturn in activity experienced by various industries and businesses, sectors such as manufacturing, food processing, e-Commerce, agriculture and healthcare have remained resilient and present opportunity for growth and investments.
Moving forward, more interventions – such as a reduction in the cost of data, further reduction in taxes for manufacturers, tax exemptions on Capital Expenditure as well as the re-opening of borders – will be required to cushion businesses as the detrimental effects of the pandemic unfold.
Impact of COVID-19 on FDI flows
The COVID-19 pandemic came at a time when global FDI had been experiencing a downward trend. Accordingly, the pandemic has exacerbated the decline in flow of FDI. The United Nations Conference on Trade and Development has projected FDI to drop by 40 percent due to disruptions to Global Value Chains (GVC) influenced by the lockdowns.
In the case of Ghana, the survey revealed a downward trend in FDI flow from the month of April to June 12, 2020 when the survey was completed. Within the period, the Ghana Investment Promotion Centre registered 13 projects with an FDI value of US$9.29million.
Regardless of the initial slowdown in FDI values as indicated earlier, a total of 21 projects had been registered by the end of the quarter -i.e. June 30, 2020, which saw the value of FDI shoot up to US$207.98million. The development therefore places a positive outlook on flow of FDI into the country, and is indicative of a better trend for economic recovery post COVID-19.
NB: Despite the intention to have a much bigger sample size for the survey, implications of the COVID-19 made it difficult.